Gold (XAU/USD) edged higher during the Asian session on Wednesday, reaching the $3,372–$3,373 zone before encountering fresh intraday selling pressure. Despite this, the precious metal remained above the overnight swing low, reflecting resilience amid a strengthening U.S. Dollar and generally upbeat market sentiment.
The Dollar’s modest rebound from a six-week low, coupled with improved risk appetite, weighed slightly on gold. However, market caution persists as several underlying factors continue to support the safe-haven asset.
Investor sentiment remains anchored in the belief that the Federal Reserve will cut interest rates at least twice before the year’s end, citing signs of easing inflation in the U.S. Meanwhile, concerns over worsening U.S. fiscal conditions—fueled in part by President Trump’s major tax and spending initiatives—are tempering the Dollar’s strength. Geopolitical uncertainties and renewed trade tensions are also limiting gold’s downside.
Labor Market Resilience vs. Rate Cut Expectations
Tuesday’s Job Openings and Labor Turnover Survey (JOLTS) revealed 7.39 million job openings in April, surpassing both the 7.1 million forecast and March’s 7.2 million figure. This data reaffirmed the robustness of the U.S. labor market and economic outlook. Yet, despite this strength, Treasury yields declined, and the Dollar remained under pressure as markets priced in two 25 basis point rate cuts from the Fed in 2025.
Federal Reserve officials struck a cautiously optimistic tone. Atlanta Fed President Raphael Bostic emphasized patience, suggesting only one rate cut may be on the table this year, contingent on incoming data. Chicago Fed’s Austan Goolsbee pointed to lagging inflation effects from tariffs, while Governor Lisa Cook warned that trade policy could push the economy toward stagflation, potentially complicating inflation management.
Trade Tensions Underpin Gold
Adding to gold’s appeal, trade-related risks are resurfacing. A planned call between President Trump and Chinese President Xi Jinping, expected Friday, comes amid renewed fears of a trade war. The U.S. also doubled tariffs on steel and aluminum imports to 50% starting Wednesday. These developments continue to inject risk premium into gold markets.
Eyes on Economic Data and Fed Commentary
Traders are now awaiting the ADP private-sector employment report and the ISM Services PMI. Additionally, speeches from influential Fed members could sway the Dollar and, by extension, gold prices. However, the spotlight remains on Friday’s highly anticipated Nonfarm Payrolls (NFP) report for further direction.
Technical Outlook: Bullish Bias Holds
From a technical standpoint, gold’s recent breakout above the $3,324–$3,326 resistance zone remains a bullish signal. Momentum indicators across daily and hourly charts suggest a continued upward trajectory. Resistance lies near $3,380, followed by the $3,400 zone—a multi-week high. A breakout above this region could open the path to retesting April’s all-time high, with a potential push toward the psychological $3,500 mark.
On the downside, any retreat below $3,355 is likely to attract buyers near the $3,324–$3,326 support area. A sustained decline beneath this level could expose gold to further losses, targeting $3,300 and then $3,286–$3,285 as key horizontal support levels.
In summary, while gold faces near-term headwinds from a firmer Dollar and strong U.S. data, a confluence of dovish Fed expectations and global risk factors continues to underpin its bullish longer-term outlook.
